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  • FIRST POST
    • ipri
    • By ipri 15th Oct 16, 2:12 PM
    • 609Posts
    • 42Thanks
    ipri
    Will new S Pension cause resentment?
    • #1
    • 15th Oct 16, 2:12 PM
    Will new S Pension cause resentment? 15th Oct 16 at 2:12 PM
    Will people who get the new SP not be a source of resentment from those who , if I'm correct, will receive less?
Page 3
    • bowlhead99
    • By bowlhead99 18th Oct 16, 12:23 AM
    • 5,092 Posts
    • 8,996 Thanks
    bowlhead99
    Ok I'm confused now, I had researched my position and read that those currently in their 50's & 60's who have paid higher levels of NI and therefore qualified for additional state pensinon would be able to keep their entitlement under the rules of 'protected payments'
    Originally posted by Straight Shooter
    It is true, the extra pension you have from paying higher levels of NI (the serps/s2p type stuff) may give you a higher "starting amount" versus the new method at April of this year, and if it does, you can keep the high starting amount.

    However, my situation which will not be uncommon is that I've paid higher levels of NI, nd under the old system those higher levels of NI *would* have helped me get to well over £155 assuming I carried on working and carried on paying into the system. However, I'm a long way from my 50s or 60s and haven't exceeded the magic £155ish figure yet. I'm only around low 120s based on a forecast a while back that didn't include 2015/6.

    So when I get my "starting amount"which is the higher of old system and new system it gives me low 120s. Then in a few years of paying NI going forward from now, (accruing 1/35th of 155 for each year worked), I will be in my mid to late 40s and have already got to the £155 maximum and then it will stop accruing, even though I have another 20 years of paying NI on a hopefully high salary, to go before I reach state retirement age.

    If I was older and my "higher of new system and old system" had already got to £200+, they wouldn't take that away from me and I could keep it. But instead, I was perhaps "well on course" to get that level but now I'm not allowed, I can only accrue flat rate - with no premium for high NI payments - until I hit the limiter and then I stop.

    I even have a couple of missed years from when I was out of the country working overseas, but it's not worth bothering filling out any paperwork to try to claim the missed years under a reciprocal arrangement, or paying out any cash to simply "buy them back", as I have no need for them, as I'll already be at £155 with 20 years to go.

    In terms of what that "costs" me: under the old system I could have had £50-100 extra per week for the same lifetime contributions. £50-100 per week from retirement age 67 to 97 is in the order of £78-155k. Ow.

    By contrast, there are some people who have been contracted out, paying lower NI contributions all their lives while their excess NI money was buying them a sweet personal or employer pension on the side. They might be at around £110 a week now under the "best of both methods" rules, and their NI over the next decade is allowed to accrue them 1/35th of £155 each working year, even on a relatively low salary, until they max out at the £155 level like me. But they have an entirely separate pension pot on the side that was funded by contracting out and paying discounted NI rates.

    So, clearly there are winners and losers under the new transitional arrangements as we move to a new system that is worse for high earners and better for low earners and various special interest groups, but overall apparently broadly cost-neutral for the country.
    • seven-day-weekend
    • By seven-day-weekend 18th Oct 16, 6:55 AM
    • 27,822 Posts
    • 51,036 Thanks
    seven-day-weekend
    Doesn't affect me or my husband, as we are both already drawing full SRP and Occupational Pensions (qualification for SRP 39 years for me and 30 years for him)- but am I correct in thinking that anyone retiring under the new rules will get their Occ Pension docked off the £155 - so that theoretically they could get £0 SRP? Please tell me I am wrong!
    Last edited by seven-day-weekend; 18-10-2016 at 7:03 AM.
    To love someone is to learn the song in their heart and to sing it to them when they have forgotten it
    'I believe in Christianity as I believe that the sun has risen. Not only because I see it, but because I see everything by it': C.S. Lewis
    St. Augustine — 'In essentials, unity; in non-essentials, liberty; in all things, charity.'
    • Linton
    • By Linton 18th Oct 16, 7:43 AM
    • 6,935 Posts
    • 6,525 Thanks
    Linton
    Doesn't affect me or my husband, as we are both already drawing full SRP and Occupational Pensions (qualification for SRP 39 years for me and 30 years for him)- but am I correct in thinking that anyone retiring under the new rules will get their Occ Pension docked off the £155 - so that theoretically they could get £0 SRP? Please tell me I am wrong!
    Originally posted by seven-day-weekend
    In general occupational pensions are not affected by the state pension. A few Defined Benefit schemes have the possibly optional feature that the payments are adjusted over time so that extra is paid before state pension age and less afterwards keeping total income constant. It's not docking, it could just as well be seen as additional payment prior to SPA. How this works will be determined by the scheme rules but it seems reasonable that as state pension age and rates increase the adjustment is changed accordingly.
  • jamesd
    am I correct in thinking that anyone retiring under the new rules will get their Occ Pension docked off the £155 - so that theoretically they could get £0 SRP? Please tell me I am wrong!
    Originally posted by seven-day-weekend
    You're wrong. The foundation amount calculation will use old rules and new rules and give the highest of the two. That will be old rules for a person who was contracted out a lot and if they have 30 years they would get the full basic state pension level plus a bit more for the time in S2P rather than SERPS.

    A private workplace pension probably has more than just the NI rebate money in it so deducting the whole amount would be excessive even without that handling.

    From 6 April 2016 no workplace schemes are still contracted out so the issue doesn't arise in the future: the foundation amount will be a reliable statement of what the starting point is under the flat rate system and future years will add to that.
  • jamesd
    Presumably some of those affected will be those public servants who retire this financial year on £120 pa while those retiring in 7 years time will receive £155 or be able to pay contributions to reach that amount.
    Originally posted by OldBeanz
    Yes, no time for those just about to retire to get the extra benefit. Optimal for this case is being just young enough to get to the flat rate cap level.
    • fredandwilma
    • By fredandwilma 18th Oct 16, 8:22 AM
    • 590 Posts
    • 946 Thanks
    fredandwilma
    Ok I'm confused now, I had researched my position and read that those currently in their 50's & 60's who have paid higher levels of NI and therefore qualified for additional state pensinon would be able to keep their entitlement under the rules of 'protected payments'
    Originally posted by Straight Shooter
    It is true, the extra pension you have from paying higher levels of NI (the serps/s2p type stuff) may give you a higher "starting amount" versus the new method at April of this year, and if it does, you can keep the high starting amount.

    However, my situation which will not be uncommon is that I've paid higher levels of NI, nd under the old system those higher levels of NI *would* have helped me get to well over £155 assuming I carried on working and carried on paying into the system. However, I'm a long way from my 50s or 60s and haven't exceeded the magic £155ish figure yet. I'm only around low 120s based on a forecast a while back that didn't include 2015/6.

    So when I get my "starting amount"which is the higher of old system and new system it gives me low 120s. Then in a few years of paying NI going forward from now, (accruing 1/35th of 155 for each year worked), I will be in my mid to late 40s and have already got to the £155 maximum and then it will stop accruing, even though I have another 20 years of paying NI on a hopefully high salary, to go before I reach state retirement age.

    If I was older and my "higher of new system and old system" had already got to £200+, they wouldn't take that away from me and I could keep it. But instead, I was perhaps "well on course" to get that level but now I'm not allowed, I can only accrue flat rate - with no premium for high NI payments - until I hit the limiter and then I stop.

    I even have a couple of missed years from when I was out of the country working overseas, but it's not worth bothering filling out any paperwork to try to claim the missed years under a reciprocal arrangement, or paying out any cash to simply "buy them back", as I have no need for them, as I'll already be at £155 with 20 years to go.

    In terms of what that "costs" me: under the old system I could have had £50-100 extra per week for the same lifetime contributions. £50-100 per week from retirement age 67 to 97 is in the order of £78-155k. Ow.

    By contrast, there are some people who have been contracted out, paying lower NI contributions all their lives while their excess NI money was buying them a sweet personal or employer pension on the side. They might be at around £110 a week now under the "best of both methods" rules, and their NI over the next decade is allowed to accrue them 1/35th of £155 each working year, even on a relatively low salary, until they max out at the £155 level like me. But they have an entirely separate pension pot on the side that was funded by contracting out and paying discounted NI rates.

    So, clearly there are winners and losers under the new transitional arrangements as we move to a new system that is worse for high earners and better for low earners and various special interest groups, but overall apparently broadly cost-neutral for the country.
    Originally posted by bowlhead99

    I wouldn't pin too much hope on the rules of "protected payments." It seems they no longer exist, certainly in my case, from what i understand, speaking to Her Majesty's government.

    I can now confirm i will receive my £155.65 (or equivalent) per week and no more, despite paying higher levels of NI for most of my working life. What a waste of money, from my perspective, (although I've supported the country, as a whole.) What a shame i wasn't born just a few years earlier. But as it's been said, there will always be winners and losers.

    By the time i would collect my SP, i will have accrued 50 years of NI contributions, which is essentially the governments target, in my opinion.

    I'm no better off than someone who has never worked, in terms of my SP. Do i regret working hard from a young age? You can't turn back the clock with regrets. But i do feel a sense of sadness i wouldn't have the health or the income to enjoy a retirement the way i had hoped. I had hoped to become a volunteer too.

    I'm done thinking about pensions now. It's only confirmed what i expected. Back to the here and now.
    Last edited by fredandwilma; 18-10-2016 at 8:26 AM.
    yabba dabba don't
    • seven-day-weekend
    • By seven-day-weekend 18th Oct 16, 8:38 AM
    • 27,822 Posts
    • 51,036 Thanks
    seven-day-weekend
    I wouldn't pin too much hope on the rules of "protected payments." It seems they no longer exist, certainly in my case, from what i understand, speaking to Her Majesty's government.

    I can now confirm i will receive my £155.65 (or equivalent) per week and no more, despite paying higher levels of NI for most of my working life. What a waste of money, from my perspective, (although I've supported the country, as a whole.) What a shame i wasn't born just a few years earlier. But as it's been said, there will always be winners and losers.

    By the time i would collect my SP, i will have accrued 50 years of NI contributions, which is essentially the governments target, in my opinion.

    I'm no better off than someone who has never worked, in terms of my SP. Do i regret working hard from a young age? You can't turn back the clock with regrets. But i do feel a sense of sadness i wouldn't have the health or the income to enjoy a retirement the way i had hoped. I had hoped to become a volunteer too.

    I'm done thinking about pensions now. It's only confirmed what i expected. Back to the here and now.
    Originally posted by fredandwilma
    That is so unfair, imho.
    To love someone is to learn the song in their heart and to sing it to them when they have forgotten it
    'I believe in Christianity as I believe that the sun has risen. Not only because I see it, but because I see everything by it': C.S. Lewis
    St. Augustine — 'In essentials, unity; in non-essentials, liberty; in all things, charity.'
    • fredandwilma
    • By fredandwilma 18th Oct 16, 8:58 AM
    • 590 Posts
    • 946 Thanks
    fredandwilma
    That is so unfair, imho.
    Originally posted by seven-day-weekend

    Well, it's true, isn't it?


    Do i regret who i am / was, as a person.


    I was a bit of a workaholic, (although i was never a "high" earner,) I'm known as a grafter, you can't change the person you are. I paid higher rates of NI thinking it would benefit my state pension.

    Yes, i do have regrets, and to anyone i would say :


    Don't spend all your life focusing on work. I know we live in a consumerist society these days, we have to survive, pay the bills etc, but take time out to enjoy those things which matter to you whilst you can, be it family, leisure time, etc. Those are the things which are most important in life, especially time with your family.


    Yes, plan for the future, but things may change along the way, over which we have no control.
    yabba dabba don't
    • atush
    • By atush 18th Oct 16, 11:28 AM
    • 15,283 Posts
    • 9,159 Thanks
    atush
    Better to be a grafter, rather than a shirker?
    • xylophone
    • By xylophone 18th Oct 16, 12:11 PM
    • 19,153 Posts
    • 10,872 Thanks
    xylophone
    I can now confirm i will receive my £155.65 (or equivalent) per week and no more, despite paying higher levels of NI for most of my working life. What a waste of money, from my perspective, (although I've supported the country, as a whole.) What a shame i wasn't born just a few years earlier. But as it's been said, there will always be winners and losers.
    You are now over 60 and started working when you were 16 - you say that you have never been "contracted out".



    I've worked and contributed for 45 years

    I didn't contract out of SERPS (or second state pension)
    Between 1971 and 1975, it is likely that you accumulated some "graduated pension" (forerunner to SERPS/S2P), though this will be a tiny amount.

    Between 1978 and 2002 you should have accumulated some SERPS and from 2002 some S2P.

    Your weekly state pension calculated under the old rules would have been the old BSP of £119.30 plus grad plus SERPS plus S2P.

    Your weekly state pension calculated under the new rules would be 35/35 of £155.65.

    You will receive the higher of the two as your starting (foundation) amount.

    It would be very common for somebody in your position who had never been contracted out for the Grad plus SERPS plus S2P to bring him/her to a position where the old rules amount would be greater than the full NSP - for some people, the G+SERPS+S2P could be in excess of £160 a week.

    Are you saying that your G + SERPS + S2P was exactly equal to (or less than) £36.35?

    Have a look at the examples here


    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf


    remembering to substitute £155.65 for £144.
    Last edited by xylophone; 18-10-2016 at 12:30 PM. Reason: typo
    • xylophone
    • By xylophone 18th Oct 16, 12:24 PM
    • 19,153 Posts
    • 10,872 Thanks
    xylophone
    but am I correct in thinking that anyone retiring under the new rules will get their Occ Pension docked off the £155 - so that theoretically they could get £0 SRP? Please tell me I am wrong!

    See

    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/447195/new-state-pension--effect-of-being-contracted-out.pdf

    remembering to substitute £119.30 for £115.95 and £155.65 for £151.25.
    Last edited by xylophone; 18-10-2016 at 12:29 PM. Reason: typo
    • atush
    • By atush 18th Oct 16, 1:47 PM
    • 15,283 Posts
    • 9,159 Thanks
    atush
    I agree, with 45 years and no contracting out- even the lower paid should be clear of 155/week?
    • fredandwilma
    • By fredandwilma 18th Oct 16, 4:19 PM
    • 590 Posts
    • 946 Thanks
    fredandwilma
    I agree, with 45 years and no contracting out- even the lower paid should be clear of 155/week?
    Originally posted by atush

    That's not what Her Majesty's secret service is saying, however, it appears i have surfed several contribution rules.






    Between 1971 and 1975, it is likely that you accumulated some "graduated pension" (forerunner to SERPS/S2P), though this will be a tiny amount.


    This is true. I have several qualifying "graduated pension" years pre 1975, however procuring that information is nigh on impossible, seemingly, (probably until retirement?) I don't think it will be a significant amount, as i was working whilst i was a student, as were most of my peers. Student loans didn't exist in those days. I seem to remember an old "grant" system, which amounted to, nothing.

    http://www.ukpensioncalculator.co.uk/guide/165/graduated-pension.html


    In April 1961 the government introduced the State Graduated Pension, also known as the Graduated Benefit or Graduate Retirement Benefit. This was a state scheme related to your National Insurance contributions which were in turn related to your earnings as an employee. Your National Insurance contributions were divided into ‘units’: essentially every £7.50 that a man contributed and every £9 that a woman contributed bought one unit. These units would be given a value and used to calculate entitlement to an extra benefit on retirement. The scheme was intended to top up the basic State Pension and ensure that pensioners had more to live on than this basic benefit alone. This early form of the earnings-related pension was later replaced by SERPS in April 1975 which has in turn been replaced by State Second Pension, or S2P.


    Apparently you can accrue a maximum of 86 units, i think it was, and it is now £7.50 to buy one unit for both men and women. I've also been told the scheme was little used.


    Between 1978 and 2002 you should have accumulated some SERPS


    Yes, all fully qualifying years.


    and from 2002 some S2P.


    Ditto
    Originally posted by xylophone

    As for the rest, you've lost me, it's all too confusing and I'm definitely not a pensions expert, but thanks for the info.
    yabba dabba don't
    • molerat
    • By molerat 18th Oct 16, 4:57 PM
    • 15,015 Posts
    • 9,367 Thanks
    molerat
    I stopped work in 2009 with 39 years of contributions. I spent the majority of my working life contracted out and have a current accrual of £135.48 so I would expected you to have more than £155.65. Have you had an on line or printed forecast ?
    www.helpforheroes.org.uk/donations.html
    • mgdavid
    • By mgdavid 18th Oct 16, 5:35 PM
    • 4,803 Posts
    • 3,971 Thanks
    mgdavid
    I stopped work in 2009 with 39 years of contributions. I spent the majority of my working life contracted out and have a current accrual of £135.48 so I would expected you to have more than £155.65. Have you had an on line or printed forecast ?
    Originally posted by molerat
    he/she said back in post #17 that a forecast has only just been requested, it would be good of them to report back when it's received...
    A salary slave no more.....
    • fredandwilma
    • By fredandwilma 19th Oct 16, 6:51 AM
    • 590 Posts
    • 946 Thanks
    fredandwilma
    I stopped work in 2009 with 39 years of contributions. I spent the majority of my working life contracted out and have a current accrual of £135.48 so I would expected you to have more than £155.65. Have you had an on line or printed forecast ?
    Originally posted by molerat

    So would i, but my online forecast says £155.65 and no more. I rang them and they said the same, although they conceded i may have some pre 1975 related pension, but i'd be surprised if it amounted to a few pounds.

    he/she said back in post #17 that a forecast has only just been requested, it would be good of them to report back when it's received...
    Originally posted by mgdavid

    I will do. As soon as i receive this, i shall call them again, although i didn't want the stress of worrying about my pension, I've started, so i'll finish what I've started. There's always pension credit for which I've done a hypothetical quote and i could possibly receive £75 a week from this, although it's still less than i would have thought i would receive from my SP. It's all probably hypothetical in any case.
    yabba dabba don't
    • xylophone
    • By xylophone 19th Oct 16, 9:39 AM
    • 19,153 Posts
    • 10,872 Thanks
    xylophone
    Did you read the link https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf
    which was aimed at the general public?

    Because it was written a couple of years ago, the figures for basic state pension and new state pension are no longer correct but the principle remains the same.

    So

    "When single tier starts we will look at your National Insurance record and work out its value under the single-tier rules. At the same time we will work out what you may have got under the present state pension rules.

    The higher of these two amounts will then become your single-tier foundation amount.

    ....... your foundation amount could be equal
    to, more than or less than the full single-tier pension.


    You say that you were always contracted in and that you have 45 years of contributions.

    Under the new rules this would entitle you to a full NSP.

    Under the old rules, it would entitle you to a full BSP of £119.30 a week plus any Grad, SERPS and S2P.

    If your BSP +GRAD +SERPS +S2P is equal to the full NSP then that is your starting amount.

    If it is less than NSP, then your starting amount is NSP.

    If it is more than full NSP ( and in your position with 45 years of Grad/SERPS/S2P one would have expected this to be the case - see the example of "Jenny" on p8 of the link ) then you get full NSP plus the extra you have accrued as a "protected payment".
    • atush
    • By atush 19th Oct 16, 7:18 PM
    • 15,283 Posts
    • 9,159 Thanks
    atush
    And dont forget, as many do, that NICs arent JUST for state pensions but cover other important things as well.
    • bigfreddiel
    • By bigfreddiel 19th Oct 16, 7:52 PM
    • 4,064 Posts
    • 1,860 Thanks
    bigfreddiel
    And another thing about the state pension, it's not a benefit, you've paid for it.

    fj
    • mgdavid
    • By mgdavid 19th Oct 16, 8:54 PM
    • 4,803 Posts
    • 3,971 Thanks
    mgdavid
    And another thing about the state pension, it's not a benefit, you've paid for it.

    fj
    Originally posted by bigfreddiel
    No; it's a benefit - as has been explained on this forum many times previously and I suspect you know already and are just being contentious - as many recipients will not have paid for it.
    One can spend a lifetime on other benefits and then receive SP in 'retirement'.
    A salary slave no more.....
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